Virginia Attorney Explains How The Truth In Lending Act Protects Your Small Business From Fraud

Small Business Is Not Immune From Fraud

The news is full of stories of small businesses and individuals harmed by online fraud and identity theft.  Most people associate fraud protection as only applicable to individuals but many of the same defenses are available to small business owners.

The Truth in Lending Act

The Truth in Lending Act (TILA) provides protection for both consumers and small businesses. When it comes to business transactions, you are only liable for fraudulent activity up to $50. The small business owner needs to take the same steps as an individual consumer when fraudulent activity is suspected.

1. Immediately report the issue to the credit card company.
2. Dispute any unauthorized charges immediately.
3. Follow up the dispute with a certified letter detailing your concerns and evidence as to why the transaction was fraudulent.

Protect Your Small Business from Fraud

However, it is important to know that there are several circumstances unique where these protections may not apply to a small business owner:

• You issue a credit card to more than 10 employees. In this case, your card issuer has the right to change its liability policy removing you from some of the TILA protections.
• You allowed someone else to use the card. In this case, you will be liable if you allow someone else to use the card and he or she causes the unauthorized charges.
• You fail to report the fraud. Any fraudulent activity reported more than 60 days after the unauthorized purchases were made may not be protected and you could be held liable.

Protecting your identity and credit is crucial when starting and/or maintaining a small business.

We Are Here To Help

Starting or running a small business comes with a lot of important decisions, many with serious legal ramifications. Our Business attorneys are here to answer your questions and help you navigate the legal side of owning a business. Whether you’re just getting started or need guidance on business structure, contracts, or compliance, we’re ready to support you. Call us today or fill out a quick form to schedule a consultation and take the next step with confidence.